LANXESS SRI Roadshow Sustainable growth. Investor Relations, April 2011

Transcription

1 LANXESS SRI Roadshow Sustainable growth Investor Relations, April 2011

2 Safe harbor statement This presentation contains certain forward-looking statements, including assumptions, opinions and views of the company or cited from third party sources. Various known and unknown risks, uncertainties and other factors could cause the actual results, financial position, development or performance of the company to differ materially from the estimations expressed or implied herein. The company does not guarantee that the assumptions underlying such forward looking statements are free from errors nor do they accept any responsibility for the future accuracy of the opinions expressed in this presentation or the actual occurrence of the forecasted developments. No representation or warranty (express or implied) is made as to, and no reliance should be placed on, any information, including projections, estimates, targets and opinions, contained herein, and no liability whatsoever is accepted as to any errors, omissions or misstatements contained herein, and, accordingly, none of the company or any of its parent or subsidiary undertakings or any of such person s officers, directors or employees accepts any liability whatsoever arising directly or indirectly from the use of this document. Chart 2 Agenda LANXESS Improving financials since day one LANXESS Growth aligned to global megatrends Sustainable corporate citizenship Outlook Chart 3 1

3 LANXESS A leading specialty chemicals company based on three powerful segments Performance Polymers Advanced Intermediates Performance Chemicals Butyl Rubber Performance Butadiene Rubbers Technical Rubber Products Semi-Crystalline Products Basic Chemicals Saltigo Material Protection Products Inorganic Pigments Functional Chemicals Leather RheinChemie Rubber Chemicals Sales: > 500 mn Sales: 200 mn 500 mn Sales: < 200 mn Ion Exchange Resins Chart 4 LANXESS has been improving its financials since day one LANXESS Group EBITDA pre [ m] Net financial debt [ m] 1,429 1, Net financial debt / EBITDA pre 4.6x 2.5x 1.2x 0.8x 0.6x 1.2x 1.7x 1.0x Gearing [%] Underlying EPS* pro forma data only (2.23) Dividend [ ] ** Ready for growth * EPS pre exceptionals, based on actual taxrate; ** proposal to the Annual Stockholdes Meeting Chart 5 2

4 Significant growth in all three segments Performance Polymers Advanced Intermediates Performance Chemicals EBITDA* [ million] +>100% 585 EBITDA* [ million] EBITDA* [ million] +44% +54% EBITDA* margin EBITDA* margin EBITDA* margin 10.5% 15.5% 13.9% 16.8% 11.9% 14.2% * pre exceptionals Chart 6 LANXESS on a path of growth Sales [ million] +41% 7,120 5,057 EBITDA* [ million] +97% Net income [ million] +>100% EBITDA* margin 9.2% 12.9% * pre exceptionals Chart 7 3

5 Strong price and volume momentum drives 41% sales growth FY yoy sales variances Price Volume Currency Portf. Total Performance Polymers 25% 29% 5% 0% Advanced Intermediates 5% 9% 2% 4% Performance Chemicals 2% 23% 4% 0% LANXESS 13% 22% 4% 1% 58% 20% 29% 41% Operational sales growth of 36% driven by end market recovery Positive currency (mainly BRL and USD) as well as portfolio effects support top line growth further FY yoy EBITDA bridge [ m] FY 2009 Volume Price Input Costs Others FY 2010 Volume and price increase in tandem, price offsets rising input costs Others contains currency benefit, overcompensated by lower savings and one-off payment to employees Chart 8 Strong cash flow finances working capital increase and substantial Capex projects [ m] FY 2009 FY 2010 Profit before Tax Depreciation & amortization Gain from sale of assets Result from equity investments Financial (gains) losses Cash tax payments / refunds Changes in other assets and liabilities Operating Cash Flow before changes in WC Changes in Working Capital Operating Cash Flow Investing Cash Flow thereof Capex* Financing Cash Flow Strong end market demand leads to good cash generation Cash-outs for tax payments on higher profit before tax Working capital outflow in line with 2010 sales recovery 2009 investing cash flow contains investment in near cash assets, 2010 contains Capex for Singapore project as well as 75 m CTA funding Capex financed by strong operating cash flow * net of projects financed by customers and finance lease Chart 9 4

6 Agenda LANXESS Improving financials since day one LANXESS Growth aligned to global megatrends Sustainable corporate citizenship Outlook Chart 10 Premium products and technologies for global megatrends Mobility Urbanization Agriculture Water Chart 11 5

7 All three segments contribute to sustainable growth LANXESS segment: Performance Polymers Mobility, growing population in Asia High performance tires Vehicle weight reduction LANXESS segment: Advanced Intermediates Increasing crop demand based on growing world population Need of farmers to raise yields Increasing focus on renewable resources LANXESS segment: Performance Chemicals Scarcity of purified water Rising middle class in APAC Chart 12 Strong regional set up 2010 sales by region [%] Regional development of sales [ m] 7,120 LatAm 13 Asia 23 North America 16 Germany 19 EMEA (excl. Germany) 29 Asia LatAm North America EMEA (excl. Germany) Germany 1,633 5, % 955 1, % 515 1, % 781 2,038 1, % 1, % 1, % 76% 43% 30% 24% Operational development* * currency and portfolio adjusted Chart 13 6

8 Considerable increase in investment, especially in Asia Capital expenditures* [ million] % 275 North America Capital expenditures by region*** [Increase over 2009 in %] Germany +82.5% +43.0% EMEA (excl. Germany) 3.4% Asia/Pacific % Investment ratio** 5.4% 7.0% Latin America +66.7% * net of projects financed by customers and finance lease; ** proportion of sales; *** circle size indicates level of investment Chart 14 Similar tire labeling initiatives are being proposed in several countries Tire labels Europe U.S. Japan For fuel efficient tires For fuel efficient tires Chart 15 7

9 Manufacturers need high-end rubber to achieve an overall performance improvement for tires Rolling resistance accounts for 20%-30% of fuel consumption Selected tire 1 classifications by grip and rolling resistance LANXESS solutions to reduce rolling resistance Rolling resistance coefficient minus 12%-14% Grip RR* E E B E B B A B E E E E SSBR Standard rubber LXS HP rubber Effect of SSBR in treads Rolling resistance reduction Rolling resistance still underperforming Grip ESBR Durability Source: GTÜ and ACE; * Rolling resistance; 1six of the leading global tire producers Chart 16 Change in consumer behavior for tire consumption triggered by an overall win-win situation Environment Environmental impact over a tire s life cycle Fuel consumption/ rolling resistance Others Production Safety Nd-PBR in side walls: - Excellent resistance to flex cracking - Exceptional resistance to fatigue Abrasion Significant reduction of CO 2 emissions possible Possible annual savings world wide: ~20 bn liter fuel ~50 m tons CO 2 emissions Efficiency Reduction of rolling resistance by 10% leads to a fuel reduction by 2-3% - Fuel: -0.2l/100km* - CO 2 emissions: -4g/km* Sources: EU; U.S. Department of Energy; Transportation Research Board; * Example for Michelin Energy Saver Chart 17 8

10 Growing car production and trend of weight reduction increase demand for high-tech plastics High-tech plastics in automotives Demand growth for high-tech plastics* +7% p.a. ~14kg/car LANXESS is the preferred development partner for new applications in structural components 2010e 2020e Car production Usage Global car production growth of ~3.3% p.a. and increased usage of high-tech plastics per car drive growth of 7% p.a.* * Source: JD Powers 08/2010, LXS own estimates Chart 18 Strength in design of structural components makes SCP a premium development partner to the automotive industry New generation of hybrid technology Hybrid technology with combination of injection molded Durethan and polyamide composite inserts - Low weight: weight reduction >10% over aluminum - Higher stiffness - Better impact performance - Possibility of complex designs - No corrosion and easier recycling Application leader: e.g. hoses and tubes for turbo charged engines, body components, oil pans, weight reduction of highest importance for e-mobility Material leader: e.g. flame-retardant products in electrical engines, ECO grades for sustainable material solution PA composite inserts Chart 19 9

11 Leading solution provider to agrochemicals Opportunity / increase in demand Grain* demand [bn tons] CAGR** 1.5% Fuel Feed Food e 2020e Chemical crop protection is serving efficiency increase to meet demand in volume growth of grain Basic Chemicals LANXESS solutions Leading worldwide outsourcing partner for the agrochemical players Technology leadership in high-end and complex chemistry Rapid ramp-up capabilities Leading supplier of Isocyanate intermediates for agrochemicals Sources: USDA, Syngenta, LANXESS prognosis; * Grain = corn, soya, wheat and rice; **CAGR=Compound Annual Growth Rate ( ) Chart 20 Solution for better biofuel stability LANXESS solution LANXESS developed the biodiesel stabilizer Baynox Additives needed to enable storage of biodiesel Quality approval by AGQM*: - Baynox to enhance the shelf life of pure biodiesel without reservation - Compatibility of stabilizer tested and issued with a no harm certificate * German consortium for biodiesel quality management Chart 21 10

12 Setting up new sustainability standards in iron oxide and chrome oxides business IPG focus sustainability IPG is driver for continuous HSEQ improvements within the iron oxide industry globally (especially in emerging countries) All production sites comply with global LANXESS standards (partly even above local regulations) IPG s focus on HSEQ has proven successful during ongoing consolidation of competitive environment Focus on sustainability further increases competitiveness Chart 22 Growing awareness for sustainability worldwide will trigger implementation of environmental standards Sustainable production in emerging countries Increased level of HSEQ guidelines and governmental enforcement: - New wave of regulations in China (e.g. for cleaner production of iron oxide pigments) - Increased consolidation of chemical production in chemical parks in China (esp. in developed areas such as Shanghai and Jiangsu province) Chinese Ministry of Environmental Protection approved a mandatory National Standard for iron oxide pigment pollution emissions to be completed in 2012 Chinese Ministry of Industry and IT ordered 2,087 plants to be shut down by end-september 2010 due to non-compliance of environmental and energy consumption rules: Global sustainability approach leads to more environmentally friendly processes and products Several plants in China ordered to shut-down due to non-compliance with pollution standards Sources: China Chemical Industry News (August 31, 2009); China Chemical Reporter (August 21, 2010) Chart 23 11

13 Growth driver megatrend water: Ion Exchange Resins ensures access to limited resource water Megatrend Water LANXESS ION products LANXESS ion exchange resins LANXESS membrane technology Growing world population and environmental pollution will further limit access to clean water Better ground and waste-water decontamination Ensure access to drinking water Ensure availability of water for special applications Safe and clean water and sanitation declared as a human right (United Nations, 2010) Chart 24 Expected scarcity of clean water as essential global challenge 7,000 5,000 3,000 1,000 Projected shortfall for clean water Global water supply & demand [bn m 3 ] 4, e clean water supply Groundwater/ surface water Shortfall 2,700=39% 4,500 Current demand 6, e demand Domestic Industry Agriculture Increasing demand for water 47 countries (one third of the world s population) suffer from moderate or severe water stress Expected global shortfall for clean water of ~40% until 2030 In 2025 ~4.8 bn people will only have access to polluted water resources Emerging countries are especially affected with Indian water shortfall ~50% Source: Charting our water future, McKinsey 2010; The 2030 World Water Resource Group: UNESCO Hydrologic Program Chart 25 12

14 Investment in membrane technology for access to market with high growth potential New plant in Bitterfeld, Germany 30 m investment in new, 2nd ION facility in Bitterfeld, Germany Development and production of new membrane filtration technology Creation of 200 jobs on a long-term basis Groundbreaking January 2010; new plant taken into operation for pilot and development phase end of 2010; first products to be launched end of 2011 Chart 26 Agenda LANXESS Improving financials since day one LANXESS Growth aligned to global megatrends Sustainable corporate citizenship Outlook Chart 27 13

15 Climate Protection LANXESS with important contribution to this long-term challenge Climate Protection The number 1 challenge Importance to LANXESS Climate protection is at the top of world political agenda: curtailing consequences of greenhouse effect as top priority of industry and society today Climate protection is a long-term challenge and helps to assure the future of the company LANXESS firmly committed to meeting its climate protection responsibilities, invests in sustainable solutions LANXESS contribution Innovative products: LANXESS offers innovative products and solutions to reduce CO 2 emissions, e.g. rubber innovations for high-performance tires Climate-friendly production: Reduction of own direct emissions as well as conserving natural resources and use of renewable energy sources where possible Renewable resources: LANXESS strengthens its commitment to produce premium synthetic rubber from biobased raw materials 1 st recipient of China s Environmentally Friendly Enterprise * Green Excellence Award 2010 by Frost and Sullivan * Award from the State Environmental Protection Administration in 2004 Chart 28 Continuous investment in sustainable growth Direct emissions in CO 2 equivalents [t/ t of product] % CO 2 -neutral energy production in modern power plants through combined heat and power generation - Plant already inaugurated in Porto Feliz, Brazil - Further plants under construction in Nagda and Jhagadia, India LARA as lighthouse project in Krefeld-Uerdingen, Germany - Investment amount 10 m, start-up beginning of 2009 Global climate gas emissions reduced by more than 50% compared with 2007 German -80% CO 2 reduction target** set for 2012 already achieved In 2010: Worldwide indirect CO 2 emissions (Scope 2) recorded for the first time Latest process technology combines profitability with high environmental standards * in tons per ton of product ; ** 80% reduction in climate gas emissions by 2012 vs Chart 29 14

16 Step towards securing alternative raw material supply Production process Gevo Development of a fermentation process to produce isobutanol organically (sugars in biomass) Intention to use technical knowhow to produce isobutene by dehydrating isobutanol Cooperation to broaden future supply options against the background of volatile raw material prices As part of this commitment, LANXESS has increased its minority shareholding in Gevo, Inc. that focuses on renewable chemicals and advanced biofuels Source: Gevo Chart 30 Sustainability Energized by LANXESS Implementation of energy management system by end of 2012 Reduction in specific CO 2 emissions by 10% per business segment by 2015 Reduction in specific energy consumption by 10% per business segment by 2015 Reduction in VOC emissions of 30% by 2015 Chart 31 15

17 Education LANXESS invests in the future and promotes young talents around the world Education Our most important resource Importance to LANXESS LANXESS contribution Demand for highly trained skilled workers increasing in contrast to decreasing proportion of young people in population. Even today there is a lack of skilled workers, particularly in the field of natural sciences Qualified young employees as basic prerequisite for the sustained success of a company anywhere in the world LANXESS acknowledges its responsibility with local education initiatives at its operating locations LANXESS wants young people to recognize the fascination of natural sciences and technology at an early age LANXESS invests in education in expertise on national and international level, e.g. Education Initiative Germany, sponsoring of various education initiatives in Argentina Chart 32 Rewarding LANXESS s sustainability Rating Category: C+ Involvement since 2006 Chart 33 16

18 Agenda LANXESS Improving financials since day one LANXESS Growth aligned to global megatrends Sustainable corporate citizenship Outlook Chart 34 Positive business trading outlook for 2011 Performance Polymers Strong demand momentum from tires and high-tech plastics expected to be ongoing in 2011; but with lower growth rates Further price increases are necessary as input costs rise Organic growth: SCP (Jhagadia, IN), PBR (Dormagen, GER, Port Jérôme, FR and Orange, US) Advanced Intermediates Demand from agrochemical customers returns - favorable effects for SGO and BAC expected Selling price increases necessary on the back of rising benzene input costs Organic growth: BAC (Uerdingen, GER) Performance Chemicals Construction industry with gradual recovery in Europe, US Automobile industry seen with continuous growth (customers of RUC, RCH) Organic growth: ION (Jhagadia, IN), IPG (Shanghai, CN and Porto Feliz, BR), RCH (N. Novgorod, RU) Chart 35 17

19 Outlook with confidence Excellent start into Q1 provides solid basis for 2011 Various projects providing additional capacities in strong demand environment Ongoing financial discipline EBITDA increase expected for 2011, on track for 2015 growth target Chart 36 Each business to contribute to EBITDA* growth EBITDA* [ million] ~1, :1 800** approved, announced projects 2004 Restructuring Organic External 2010 Organic Add. organic and external ~80% Minimum EBITDA* growth for each business: 5% CAGR + ~80% * pre exceptionals; ** as communicated at LANXESS capital markets day Chart 37 18

20 Chart 38 Abbreviations Performance Polymers Advanced Intermediates BTR PBR TRP SCP Butyl Rubber Performance Butadiene Rubbers Technical Rubber Products Semi-Crystalline Products BAC SGO Basic Chemicals Saltigo Performance Chemicals MPP IPG FCC LEA RCH RUC ION Material Protection Products Inorganic Pigments Functional Chemicals Leather Rhein Chemie Rubber Chemicals Ion Exchange Resins Chart 39 19

21 Upcoming events 2011 Upcoming events Q1 Results 2011 May 11, 2011 Annual Stockholders Meeting May 18, 2011 Q2 Results 2011 August 11, 2011 Q3 Results 2011 November 10, 2011 Chart 40 Contact detail Investor Relations Oliver Stratmann Head of Investor Relations Tel. : Fax. : Mobile : Oliver.Stratmann@lanxess.com Verena Simiot Assistant Investor Relations Tel. : Fax. : Mobile : Verena.Simiot@lanxess.com Tanja Satzer Constantin Fest Joachim Kunz Private Investors / AGM Tel. : Fax. : Mobile : Tanja.Satzer@lanxess.com Institutional Investors / Analysts Tel. : Fax. : Mobile : Constantin.Fest@lanxess.com Institutional Investors / Analysts Tel. : Fax. : Mobile : Joachim.Kunz@lanxess.com 20